As the sun sets on the first quarter of 2016, dovish remarks from officials at the Federal Reserve have buoyed market sentiment, but many investment strategists are expressing a more cautious brand of optimism.

Perhaps the most optimistic commentary comes from Brett Wander, Charles Schwab Investment Management’s CIO of fixed income, who believes that positive job growth, stable numbers in housing and manufacturing and signs of only mild inflation point to a better 2016 than many strategists have anticipated moving into the second quarter.

“I think that the degree of pessimism that we’re seeing in the marketplace isn’t really applicable to the U.S.,” Wander says. “We’re moving in a positive direction. Pessimism is more appropriate in Europe and Japan.”

At BlackRock, Heidi Richardson, head of investment strategy for U.S. iShares, and Tushar Yadava, investment strategist, have written that recent comments by Fed Chair Janet Yellen at the Economic Club of New York provided a boost in equities, commodities and emerging market currencies. But the two strategists cast wary eyes at future rate hikes and a rising dollar.

At Russell Investments, the shifting markets have led to shifting strategies: This quarter, the Seattle-based asset manager said in a report that it is taking a more cautious approach, citing volatility caused by diverging monetary policies and a softening business cycle.

“Our investment strategy process is moving away from 'buy-the-dips' toward 'sell-the-rallies,' though we still see low-single-digit returns globally for 2016," wrote Andrew Pease, Russell Investments’ global head of investment strategy. "With downside risks for equity markets outweighing potential upside scenarios, we expect to maintain a cautious outlook until business conditions improve.”

Omaha, Neb.-based CLS Investments noted in its outlook that the markets are returning to volatility after five years of gains buoyed by accommodative monetary policy where U.S. markets outperformed internationals.

In the second quarter update of its 2016 “Global Market Outlook,” Russell’s strategists downplayed recession concerns, but also reduced their expectations for equity returns from low to mid- single digits at the beginning of the year to just low single digits after seeing “expensive valuations and waning price momentum.” The strategists are now neutral on equities.

Wander believes that recession fears can be put to rest for the near term.

“As we’re seeing more consistent economic data, we’ve also seen a decline in volatility across all markets in the past month,” Wander says. “Even seven weeks ago, when the market was pricing in a recession, the yield curve was flattening and risk assets were underperforming. All of that was in contrast to most of the economic data, which was positive.”

The iShares strategists noted that softening monetary policy boosted equities across all sectors except for financials—underperformance that might be due to anticipation of a prolonged low-rate environment or future rate cuts.

Russell, which reported $241 billion in assets under management as of December 31, 2015, believes the Federal Open Market Committee’s projection of two interest rate increases could result in an increase of the 10-year U.S. Treasury yield to approximately 2.3 percent over the next year.

CLS Investments’ analysts said that the disparity between the Fed’s interest rate projections and market expectations of just one 25-basis-point interest hike shouldn’t impact portfolio allocations, arguing that investors who pulled away from fixed income after the Fed raised rates in December 2015 were left with little shelter during the volatility in equities during January and early February this year.

Wander says that the recent statements could actually be considered more hawkish, given that Yellen was discussing the potential of negative interest rates in the U.S. as recently as February.

“As long as we see economic data continuing on a positive trajectory and reasonable levels of volatility, if April and May are like March, it’s highly likely that the Fed will raise rates in June,” Wander says. “I would support that the right level for fed funds based on inflation and other considerations is probably closer to 1 percent than zero.”

Wander doesn’t believe that interest rate hikes necessarily lead to large fluctuations in fixed income markets, pointing out that the recent “liftoff” in December 2015 was followed by a small rally in Treasurys, bucking some assumptions about the negative impacts of tightening monetary policy.

Russell Investments, on the other hand, is pessimistic on fixed income markets, predicting that government bond yields will remain at or near their record lows throughout most of the developed world.

Not that Russell is particularly high on equities. The firm argues that the business cycle is entering a phase where it “is less supportive for equities.”

“While we do see more prevalent downside risks for the U.S. following the first quarter of 2016, the lack of major imbalances in the U.S. economy makes a recession this year unlikely,” said Paul Eitelman, Russell’s investment strategist for North America, in a report.

Omar Aguilar, Charles Schwab Investment Management’s CIO of equities, said in a different report that volatility in equities should continue for the time being, and that investors may want to shift from growth-oriented stocks to value opportunities.

Russell is predicting the end of the dollar’s run, instead favoring the yen and eyeing a potential selloff in developing market currencies.

Looking globally, Russell believes that China is in for a soft landing, and Asia-Pacific equities in general are expected to generate low absolute returns and high volatility over the next year.

Russell says that Europe and Japan present the best value opportunities in equities while sounding a note of caution on emerging markets. Equities in both regions are benefiting from quantitative easing, but Russell says that the impact of QE should continue to diminish, strengthening the yen and the euro against the dollar. The firm is currently overweight in bonds and equities in Europe.

Schwab’s Aguilar agreed that Japan produces the best opportunity for value moving into the second quarter, but Wander warns that monetary policy in Europe and Japan is a sign of market weakness.

“Our central bank policies are divergent because the economies are moving in different directions,” Wander says. “The fundamentals in Europe and Japan are unstable and deteriorating.”